How The Credit Crunch Has Affected You

At the heart of the current financial crisis is the freezing-up of the credit markets -- car and student loans for consumers, payroll-making loans for small businesses and so forth.

So we asked you: Has the credit crunch affected you yet? The question was open to everyone, but we were particularly keen to hear from business owners and managers.

So far, we've gotten 78 responses. Interestingly, there are a number of commentors who say they've forgone credit altogether -- often after bad experiences -- and live on a cash-only basis.

All of the comments are posted on the original entry; here, we post some of the best comments:

- "Within the last 15 days, the interest rate on our business line of credit has increased by 70 basis points (.7 percent). This will increase our cost of capital significantly and if the trend continues will require us to begin reducing costs especially if our customers begin experience similar impact. The credit market have not been functioning since around Sept. 15. The initial impact has been restricted to the financial service sector but without Congressional action this week all sectors of the economy will begin to contract without the smooth exchange of funds required to operate most organizations."

- "As a small business owner (12 employees), here is what I have lived through in the past week: One employee's husband has received a 25 percent pay cut as part of a restructuring economic move at his company and another [employee's] husband lost his family health insurance. A third may lose his job when his whole department is cut next week. All will affect our company due to increased requests/pressure on us to step in. No, I have not tried to get credit -- I will just be hoping to help us all make it through the last quarter."

- "The week before last I tried to refinance my mortgage that I took out 2 1/2 years ago: [It is] 10 percent down, 10 percent home equity, 80 percent interest-only with interest rate to increase in five years. I still have 2 1/2 years before I have to worry, but began to worry anyway with everyone else facing foreclosure. I thought I'd like to take advantage of lower interest rates now to switch to a 30-year fixed. No such luck. Even with my 806 credit score, my $92,000/year salary, and my 18 years on the job, they wouldn't let me refinance: my house has lost too much value."

- "I haven't felt it yet, but did notice that car loans at my credit union increased 1.75 percent since last week."

- "I am trying to sell my home, but can't find a buyer who is able to get financing. I am willing to sell for what I owe, or even less if I have to, but the foreclosures in the area have driven down all home values. This is a 1949 Craftsman cottage, not a big, new McMansion."

- "Both of my credit cards have jumped the minimum payments to between two to three times the prior rate. So, yeah, it's affected me."

- "I learned early that being in debt was painful. I set out to be free of debt. It took a few years but I paid it all off. Now I own everything free and clear. I am able to run a technology company without debt. I am able to run my life without debt. In our society, the money lenders would have everyone believe that one can not do without them. I am here to say, 'Yes, you can,' and you will be richer for it."

- "Ironically, I received an unrequested e-mail from my credit card company yesterday telling me that my credit limit was being increased by about $10,000 for being such a good customer. At least somebody has money to lend."

Comments

I am 100% in agreement with the revised bail out bill in Congress. I have changed my mind. "If a business can not make Sales, then the business can not make the payroll." WE MUST DO SOMETHING BUT NOT NOTHING.